Less Stress, More Money in Self Storage, Part 1

October 31, 2011 § Leave a comment

Recently, I announced that I would provide a ten-part low-tech plan to reduce stress as a self storage operator, resulting in increased satisfaction and, hopefully, more money.

Here goes with Part 1: Protect Your Status as a Non-bailee.

As recently as 40 years ago, consumers wishing to store goods offsite did so at a warehouse. The customer turned their goods over to the latter’s custody. They were stored under the care, custody and control of the warehouse. If the goods were lost or damaged, the liability lay with the warehouse. i.e. a bailment.

The self storage industry was founded from a basic desire to provide an alternative where the liability for the goods remained with the tenant, so to speak, not the warehouse operator. Thus, self storage was born. Rather than turn care, custody and control of the goods to the warehouse, the tenant remained in control. He or she placed a lock on the storage unit and retained the key.

A good way to understand the difference is to consider valet parking, where you leave your car and keys with the attendant versus self storage. If the attendant damages your car, they pay; if your tenant has damage to their property, hopefully, you do not pay.

Therefore, Rule 1: Protect your status as a non-bailee. How?

First, be sure that this idea is clearly set out in your rental agreement. State that no bailment is created and that the care, custody and control of the stored goods always remains solely with the tenant.

Second, do not engage in behavior that would re-establish a bailment after the fact. For example, limit your ability to enter the unit without permission to real emergencies. If you want to enter to perform routine maintenance, get permission first. Do not accept deliveries for tenants and volunteer to place them in the unit. Develop a separate delivery authorization agreement that re-states your non-bailee status and set up a holding area for deliveries where tenants can collect them and place them after-the-fact in their units themselves.

Third, be sure that in the case of delinquent tenants, you do not risk your non-bailee status until the lien process is complete and you have authority under state law to enter the unit and dispose of the property via auction.

Question: do over-locks jeorpardize your non-bailee status? My opinion is that they do not because only a stalemate is created. Your access is no better than the tenant’s at this stage. Your tenant my be denied access, but you do not gain anything new. Their lock still protects their property.

Your status as a non-bailee is a crucial part of your self storage business. Protect it; don’t overlook it.

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